Is Outsourcing HR the Right Option for my Small Business?

A lot of small business owners only learn that they can outsource their HR functions well after they start their operation, and it’s understandable. After all, why would anyone outsource a function so personal to an organization like HR? The truth is that an outsourced HR team may understand the needs of your business and employees more than you ever will and do a much better job at recruiting too. There are some cases, however, when moving to an outsourced HR service provider wouldn’t make the most sense. Let’s take a closer look at the pros and cons of outsourcing HR to see if it is the best solution for you.

Pro – Save Money and Time

If you’re a small business and have an HR department, we can tell you right now that they’re not doing much most of the day. HR is not something that requires constant attention, especially when you’re only a small team of 50 or so employees. It’s almost certain that you’ll be able to save by going with an outsourced service, for instance, an outplacement service. You will only be paying for service rendered, not by the hour, so you can expect to get a return on every pound you spend on them. 

Outsourcing HR could also help you save a lot of time if you’re handling it on your own. The biggest benefit is when it comes to eliminating repetitive menial tasks like background checks and checking independent contractor compliance, large volume recruiting, and onboarding, for instance.

Con – Less Human Connection

When you handle every part of the HR process, you get to build a closer connection with the people you hire and work with. HR will have to deal with some of the most emotional and challenging situations in an office. HR will work not only with employees, but also their families on personal matters like health and finances, and there could be a disconnect between employees and upper management if the people handling HR are off-site. So, this is something you’ll have to think about.

Pro – Better Results

Outsourced HR support teams, the good ones at least, are experts in recruiting, onboarding, and training employees. When all those things are done right, you end up with a more focused, motivated, and productive team. They are also much less likely to leave after a few days or months. The people you recruit will be right in line with your company culture too. As a matter of fact, an HR service could help you build a company culture if you don’t have a solid one already. All of this will eventually benefit your business’s productivity and bottom line.

Con – Less Availability

One of the benefits of having an HR team is that they will be able to attend to urgent affairs fast. HR often has to put out fires and not having access to an HR professional who knows the employee(s) involved at a deep level will make things difficult. 

Since there will be a certain level of disconnect between you and your staff, there might be some issues you weren’t aware of, and you might not be able to competently solve issues until you get someone from your outsourced team to come over.

These are all things you’ll have to consider before you outsource your HR department. In most cases, however, small businesses can stand to benefit from outsourcing at least some HR functions, so look into it in more detail.


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